PR. COMMISSIONER OF INCOME TAX-1, LUDHIANA vs. M/S FRANKLIN LABORATORIES (INDIA) PVT. LTD.

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ITA/111/2022HC Punjab & HaryanaPHHC01031379202226 February 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MRS. JUSTICE SUDEEPTI SHARMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal (ITAT) was correct in setting aside the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] under Section 263 of the Income Tax Act, 1961. The Tribunal's finding that the Assessing Officer (AO) had conducted due enquiry and passed the assessment order after considering the documents submitted by the assessee was upheld. The High Court agreed with the ITAT's observation that the Principal CIT's order under Section 263 focused on a deduction under Section 80IC of Rs. 7,54,714/- with a net credit of Rs. 1,95,905/-, which was below the threshold stipulated in Circular No. 3 of 2018 for examination. Therefore, the High Court found no need for interference with the ITAT's order. The appeal filed by the revenue was dismissed.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax-1, Ludhiana, has appealed against an order dated 28.10.2021 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench-A. The ITAT had set aside an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A)'s order was challenged on the grounds that the CIT(A) had wrongly exercised jurisdiction under Section 263 of the Income Tax Act, 1961. The ITAT found that the Assessing Officer (AO) had conducted due enquiry and passed the assessment order after considering the documents submitted by the assessee, M/s Franklin Laboratories (India) Pvt. Ltd. The ITAT also noted that the Principal CIT, in his Section 263 order, had focused on a deduction under Section 80IC of Rs. 7,54,714/- with a net credit of Rs. 1,95,905/-, which was below the threshold for examination as per Circular No. 3 of 2018.

What were the issues?

1. Whether the learned CIT(A) wrongly exercised jurisdiction under Section 263 of the Income Tax Act, 1961, by setting aside the assessment order passed by the Assessing Officer. Assessee's Contentions: The assessee argued that the Assessing Officer had conducted due enquiry and passed the assessment order after considering the evidence on record. The CIT(A) erred in invoking Section 263 as the assessment order was neither erroneous nor prejudicial to the interest of the revenue. Revenue's Contentions: The revenue contended that the CIT(A) had correctly invoked Section 263, implying that the assessment order was erroneous and prejudicial to the revenue's interest, necessitating revision. The revenue likely argued that the AO had not conducted sufficient enquiry regarding the deduction claimed under Section 80IC.

Which sections of the Income-tax Act were involved?

Section 263,Section 80IC

AI-generated summary — verify with the full judgment below

ITA No.111 of 2022 1

2024:PHHC:027004-DB IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 114 ITA No.111 of 2022 Date of Decision:26.02.2024 Pr. Commissioner of Income Tax-1, Ludhiana

....Appellant Versus M/s Franklin Laboratories (India) Pvt. Ltd. .....Respondent CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON’BLE MRS. JUSTICE SUDEEPTI SHARMA **** Present: Mr. Ranvijay Singh, Sr. Standing Counsel, for the appellant. **** SANJEEV PRAKASH SHARMA

, J. (Oral)

1.

The revenue has challenged the order dated 28.10.2021 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, whereby the order passed by the CIT (A) has been set aside holding that the learned CIT

(A) has wrongly exercised jurisdiction under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act of 1961”). It has reached to conclusion of facts that as per evidence on record, it is found that the Assessment Officer (AO) has passed the assessment order after conducting due enquiry in light of the documents in detail as submitted by the assessee during the assessment proceedings. He also found that while passing order under Section 263 of the Act of 1961, the Principal, CIT has only observed DINESH 2024.03.06 12:16 I attest to the accuracy and integrity of this document

ITA No.111 of 2022 2

2024:PHHC:027004-DB with regard to the deduction under Section 80 IC of the Act of sum of Rs.7,54,714/- as a net credit Rs.1,95,905/- which is much below to the amount to be examined by this Court in terms of the Circular No. 3 of 2018 dated 11.07.2018. In view thereof, no need for interference in the order impugned in the present appeal is made out and therefore the present appeal is dismissed. Pending applications, if any, also stand disposed of.

(SANJEEV PRAKASH SHARMA)

JUDGE (SUDEEPTI SHARMA) JUDGE February 26, 2024

dinesh Whether speaking : Yes/No Whether reportable : Yes/No DINESH 2024.03.06 12:16 I attest to the accuracy and integrity of this document

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